Unlimited paid time off: the pros and cons

Hannah Sims · 03 May

When Richard Branson announced that Virgin staff were to shortly be treated to untracked vacation time, business communities around the world sparked up with debates and opinions.

Everyone had something to say. And most of it seemed to argue against such an out-there, off the wall and plain crazy idea. Yet this world-respected serial entrepreneur is far from alone. In fact, he’s joined by some of the most profitable businesses in the world: Facebook, Netflix and Google have each adopted the same approach, and they’re pretty successful, right?

Here we take a balanced look at the pros and cons of unlimited paid time off, to explore whether this innovative approach to employee appreciation is one that is likely to pay literal dividends.

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The Pros: Happy employees = happier turnover and profit margins, doesn’t it?

Unlimited vacation (unsurprisingly) leads to happier employees

We’ve written plenty of blog posts all about the effect of happy employees upon their organisation’s bottom line. We know we go on about it, but it’s true: positive emotions and mood are key drivers of success. Happy workforces are 12% more productive, they are more creative and have better analytical capacities.

Not only that, but 40% of our capacity for happiness is within our power to change. That ‘our’ is collective: it includes ourselves, our families, our friends, but also our employers.
Unlimited PTO can act as an investment. If the freedom to choose the duration and timing of our own holiday increases employee happiness, then the ROI is there. In other words, it makes business sense.

Tap into talent that comes to you

The attraction of unlimited paid time off is practically equalled as far as staff perks go. The offer of amazing benefits like this is sure to encourage the brightest and best to come knocking on your door…

…And we all know that the attraction, engagement and retention of top talent is crucial in today’s competitive business world.

Your employees are re-energised

Those who are overworked are less productive. It’s not ground-breaking stuff. With unlimited vacation time employees can enjoy lengthier breaks that truly re-charge batteries. A week here and there is rarely enough for employees to catch up on lost sleep, let alone fully recover.


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Consistency

Employees with flexibility are far more likely to consistently show up for work and a lot less likely to suddenly and unexpectedly call in ill. This makes it easier for businesses to manage responsibilities and cover absences.

Empowerment

By giving employees the freedom to choose when they take time off, you are arming them with a new dimension of autonomy and control over their lives. By showing an employee you trust them, they’ll automatically feel more empowered in the workplace. They’ll be able to solve problems and provide solutions more rapidly than someone without that freedom of choice and level of empowerment.

The Cons: Is this perfect equilibrium all that it seems?
Unlimited vacation time can lead to abuse by the terminally de-motivated

For workers who would rather be anywhere but work, an unlimited vacation policy can simply equate to a year round holiday. It goes without saying that this level of absenteeism will damage your bottom line: it will provoke a feeling of resentment amongst coworkers, will do absolutely nothing for productivity levels and, ultimately, could breed the one thing that such a policy is intended to overcome: de-motivation.

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It’s not an approach that is suitable for all

Few companies will be able to implement unlimited paid vacation corporation wide. The fact remains that some job roles are simply unsuitable for such a policy. These include roles within the finance department, or jobs upon the factory floor, where certain staffing levels must maintain product churn in order to ensure their company keeps up with competition.

So what’s the verdict?

PTO is something that works on a case for case basis. As fluffy as it sounds, there’s not always a one-size-fits-all policy.

The success of such a policy comes down to its management – managed well, unlimited PTO is a super trendy, engagement-boosting strategy that could represent a business factor that differentiates your organisation from the rest. Managed poorly, you could find yourself in the office on your larry, as your entire team conveniently opt to take time off simultaneously.

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